U.S. stocks ended the week little changed from the previoius week, while the U.S. Dollar Index fell to fresh 2009 lows. One has to wonder why the greenback is so weak against the likes of the British Pound. Isn't the UK economy far worse than our own? Oh, maybe it is because we are printing all those dollars to pay for all of the government spending that will be coming down the line.
U.S. Treasuries do not paint a very bright picture either as the 10 Year Note was yielding 3.4% by the end of the week. This is going to start putting upward pressure on mortgage rates, which have held below 5% for a few months now. Unfortunately, many folks have not been able to refinance as they simply do not qualify to refinance.
Commodity prices are moving up in response to the weak Dollar and the prospect of a slower decline in the economy. Crude Oil closed above $60 for the first time since the first week of January. Coffee and Soybeans have moved sharply higher in recent weeks. Yet, for the most part, the Fed continues to focus on deflationary pressures. That may be the issue confronting us in the short term, but it seems painfully obvious we will have an inflation problem down the road. If not, it is only because interest rates have climbed high enough to shut off any economic recovery.
Nonetheless, there are some individual stocks that have been making some big moves into new high territory. Among these are a couple of coffee related businesses. Thus, there is still opportunity to make a buck even if this turns out to be a bear market rally.
Stay Tuned!
Scott Cole
www.theultimatestocktradingsystem.com
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